In his fiscal 2025 budget proposal, President Joe Biden asked Congress to provide an unprecedented $104 billion in additional funding for the IRS on top of its $12.3 billion annual budget and the $80 billion the agency already received through Biden’s Inflation Reduction Act.
Worryingly, when I questioned IRS Commissioner Danny Werfel about when the IRS would stop the excessive growth of its federal budget, Werfel responded that the proposed increases are intended to become the new norm for the IRS. This is unacceptable.
At a recent hearing on the IRS’s budget, I reminded Werfel of his previous claim that the IRS would have a decade to “rebuild” with the $80 billion in IRS funding already authorized. While many rightly continue to raise questions about that significant increase in funding, which was a five times or more increase in the IRS budget, the IRS claimed it needed the money to maintain employees and update its systems.
Now, the IRS is justifying its request for another $104 billion in mandatory multiyear spending, or eight times the agency’s annual budget, as again being needed to maintain IRS employees and update its systems. My question stands: When will taxpayers see the end to the staggering growth of the size of the IRS in budget requests?
Historically, IRS annual appropriations have remained largely consistent when adjusted for inflation, and budgets have been generally stable for at least the last two decades. In 2004, the agency’s budget was $10.4 billion; in 2014, about $12 billion; and in 2022, $12.6 billion. Then came the $80 billion influx in supplemental spending from the Inflation Reduction Act on top of the IRS’s annual budget.
Last year, when the agency released its strategic plan for the $80 billion, I raised concerns about the plan’s vagueness and missing line-item cost projections. A year later, we still lack important details. Instead of providing Congress with a thorough accounting and justification for funds, the president’s 2025 budget takes a “just spend more, no questions asked” approach. This approach is not a solution.
For years, the IRS’s auditors have flagged its failure to plan and identify efficiencies and budgetary savings effectively. I support the IRS modernizing its technological systems, but the IRS has received decades of stable funding to do this, and the results are chronically lackluster.
Despite claims that the $80 billion in new funding would “transform the IRS into a 21st-century agency,” for example, the agency has little to show for it. It seems taxpayers have paid billions of dollars just for mail to be opened and phone wait times to decline slightly. Meanwhile, several million items of taxpayer correspondence remain unanswered, and more than half a million ID theft cases remain unresolved. Supplemental modernization funding is also scheduled to run out years before the IRS finishes planned projects.
The necessary improvements to the agency’s operations do not require $80 billion, much less another $104 billion, but better prioritization and execution. Modernization should also enable the IRS to become more efficient, reducing its annual funding needs.
Instead, the president’s supersized budget request is asking taxpayers to fund permanently a bloated, inefficient IRS with no end in sight.
Rather than focus on fixing the IRS’s operational problems, the bulk of Biden’s supplemental funding is dedicated to increased enforcement and used for unnecessary side projects. An emblematic example of unwise spending is the redundant government-run tax preparation project Direct File, which the Government Accountability Office says this year may cost more than $100 million to operate and “might” serve 100,000 taxpayers.
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In other words, the program costs about $1,000 per taxpayer. This, despite the IRS already offering multiple free filing programs.
Before requesting any additional funding, much less another $104 billion, the IRS needs to be held accountable for the choices it makes, become more efficient, and provide full transparency to Congress and the taxpayers. I will continue to use every opportunity to stop the IRS from using more taxpayer dollars to pursue wasteful, redundant programs and impose heavy-handed enforcement on hardworking people at the expense of needed improvements to taxpayer services.
Mike Crapo is a U.S. senator for Idaho and the ranking member of the Senate Finance Committee.
